Fig’s latest update is an example of something I call ‘being economical with the truth’. To be clear, I hadn’t heard much about Fig until fairly recently, but it made my spider senses tingle. Fig is a relatively new crowdfunding website that markets itself as a place fans can invest in video games and get money back in return and that is the very reason I don’t trust it. See Fig has some problems, it’s an example of a nice concept that doesn’t really play out well in reality. While I frequently hear backers wishing they could get a cut of the profits not many understand the complexities of the investment process. If it were easy everyone would be doing it as a way to make money doing barely anything, but it isn’t easy. So I’m sure you can understand my confusion and suspicion when Fig released this simple Flowchart to help people understand their service a little better:
Seems pretty simple… Too simple
When Fig started out its major flaw was that the law prevented just anyone from investing. Only ‘Accredited Investors‘ were allowed to invest and that is legalese for someone with a minimum income of $200,000 or a net worth of $1 million. Not really your average video game fan is it? However, recent changes to the law have thrown caution to the wind in the form of the Jumpstart Our Business Start-ups Act. This allows anyone to invest on Fig as long as they have a minimum of $1000. I don’t think this is a good thing, Accredited Investor status was created to protect the investor. It basically said that you have enough money not to be hurt by a loss anyway, but now people who CAN get hurt can invest. They say the path to hell is paved with good intentions and I think Fig has actually created something that could go very badly for everyone involved. People will want to invest to receive dividends and gain money, but how much money does an indie game make? Arguably Psychonauts and Rock Band are two established brands, but what about the rest? Also, you have to remember you are investing in a single game, not a business, I don’t know how much people think they will earn back from a single game, but I sincerely doubt they’ll be rich from it.
Psychonaughts 2 ended up raising nearly $4 million on Fig
Just one thing to keep in mind is that shares in Ubisoft are only about 30Euro right now and that is after about 5 years of the price increasing. Twitter stocks are under 20 dollars most of the time, and companies are always going to be a better investment that than a single product from a company. Just take a moment and think back to games you have backed on Kickstarter that once released have had mixed reception or downright bad reviews. As a backer it is disappointing, as an investor it is devastating. As far as investing in video games does, don’t. You are better off investing in established businesses that aren’t going to go bust any time soon.
Still there are things I like about Fig. It’s smaller and much more focused and regulated than Kickstarter for one. They appear to be starting off small working on just one project at a time (mostly), which I assume will increase over time. They have a team of educated people behind it and I think with time it could become something good. While researching this piece I noticed that many people had reservations about Tim Schafer’s involvement in the project after his behavior on Kickstarter. While I understand that, I doubt he would be able to do much harm on such a small team especially since they are a new business.
The one other thing that I had in the back of my mind is that while Fig is similar to Kickstarter in some ways it is also for an entirely different audience. Kickstarter is all about bringing unique projects to life, things that might not have mass appeal but we still want them. It’s a little cool and weird and slightly hipster in it’s own way, but Fig is something else. It has the focus on mass appeal, because when investors are involved a company has to do the best for them. In some respects they are from different ends of a spectrum and while there are things I like about it, I’m sticking with Kickstarter. For all it’s faults, it’s familiar and allows me to fund the quirky games I love even if they don’t appeal to the masses.
My advice to any inspiring investors out there would be to approach Fig with extreme caution. It may seem like a simple version of investing, but your money could be invested in much better and more profitable things. We love to support the games we care about, but we also need to be wise about it. That said, I won’t write Fig off completely just yet, I’ll give it some time to see how it goes. What are your thoughts about Fig? I’m a looking too deeply into the specifics to enjoy the concept? Comment down below!
A good article. I already stated once my view with Fig which share some points with your view. The economic model chosen is simplified to the point where it could mislead investors. It doesn’t take in account of several economic factors that can simply reduced your income, like inflation for example.
In any case either you’re being very thorough and explain every pro and con of the system and make a biblical encyclopedia of 300 pages. Either you don’t make one (system). Throwing such a simplified system is akin to misleading and take advantage of other limited understanding.
In itself investing model exists and i am not against it. But, like said it is either too permissive or restrictive.
I don’t thing it should be open to everyone, neither to only those who can afford it. Rather i think the median average yearly household income are around 50k. That should be the line. Like this it would allow average people to invests and protect those who shouldn’t.
I also stated before that this platform seems like a private party. I don’t see here any “indie” dev, i only see here relatively already “known” people/dev who probably know each others and are using their own platform as self-endorsement. That is a very weak link on Fig Policy for me. What they “should” do is select like GoG a series of “interesting” young starters.
Stuff like redhook, Ink Stain, Solarfall, King Dinosaur, juggernaut, Perihilion, numatian, etc.
That is the way i wish Fig would go for, selective, qualitative but fair. Atm, it looks like their doors are only open if you’re on the list. Real indies with amazing ideas aren’t there and until Fig doesn’t reflect on itself, i don’t think it will change.
Also, it seems that Fig is helping out when it comes to managing your campaign with a dedicate staff.
What i wish they could do would rather be involving themselves in the dev of the game “supervising” it.
Offering to the backers the assurance that the game will not go astray or vanish in the nature. That could be a game changer, how many backers have gone through the story of an ambitious creator who envisioned more than he can chew..and gave up in the end? Or just Vanish.
With the people on the board i think they’ve got the means to do it. That is one of the weak point of KS, no supervising at all, i will give an example of what i mean. Corey Cole and Lars Simkins had real isues with their games mostly because of programming they wasted years and money trying to go over that issue (not counting the stress and pressure).
At this point Fig could supervise and help the creator dealing with it, proposing consulting specialized staff that could help you or even facilitating employment of qualified staff (i am sure they have the network available).
Anyway, just my two cents. Fig has a good idea but they’re really going the wrong way with it.
They’re already featuring smaller games from up and coming indies. They want to do a mix of established developers and up and comers.
Frankly everything about Fig is better for the developer compared to Kickstarter in that Fig is focused on gaming, can provide some advances and capital to developers, they can help with press, with putting you in touch with the right people to get the resources and info you need to be successful. They’re kind of like a publisher that is ran on public backing and investment.
Remember that Fig games can be pledged to just like regular crowd funding, you don’t have to invest. Certain people will want to invest, especially if it is game they feel strongly will sell well.
Look at the the campaign for Pillars of Eternity 2, Deadfire. https://www.fig.co/campaigns/deadfire
That is a game that sold almost 1 million units and was a break out hit, with nearly 78,000 backers. Now you can pledge towards the sequel or you can invest some money and gain equity. Looking at the art and animation revealed so far, as well as the talks about what they’ll be doing mechanically, you pretty much know the game is going to outsell the first one. Sequels of popular original IP games almost always outsell the first one. Not that is certain, nothing of course is certain.
One thing that bothered me about the article above is that the author clearly doesn’t know a lot about how investing works. That’s fine but at least admit it. She talked about buying stocks like was the same thing. Fig isn’t a stock. You aren’t buying a piece of the games company. You’re buying equity in a product.
So for instance if you invest $1,000, the minimum amount allowed, in Pillars 2 you are going to get a chunk of the revenues from that game. The biggest chunk of revenue goes to the developers, then a smaller chunk goes to the Fig investors and then a much smaller chunk goes to the Fig company.
They’ve given numbers on the rev share and a graph. Assuming average unit price of $44.99 at ~650k units sold you would break even, so you have received your original $1,00 back. At ~700k units you would have a 13% return, i.e. you put in $1,000 and got back $1,130. After you reach a 13% return your rev share gets basically cut in half but if the game is a break out hit, let’s say selling 1.5 million units, you could still end up with like a 50%+ return, which is huge.
I’m not saying I recommend people do it, I’m just saying this is MUCH for small to mid-sized developers than the author of the article seems to think it is and those are two sizes of developers that need all the help they can get in the day of AAA publishers. Thankfully the days of AAA publishers being the only publishers or options in town are over, but only for some types of games.
The day find ways to have even large, high production value games funded in interesting ways by studios that own their own IP it will truly be a conclusion to the revolution that crowdfunding has started.
[…] different than the standard offerings? Those were the days, right? Now with platforms like Fig and Indiegogo offering crowdfunding as an investment option, safer, more marketable games are […]